A Conversation with Brian P. Simpson on Why Markets Don't Fail

Episode Transcript
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Blair (00:08):
Well, good afternoon, ladies and gentlemen.
Welcome to another episode of the secularFoxhole podcast.
Today we have a returning guest.
Brian Simpson is a economics professor at
National University.
Is that correct, Brian?

Brian (00:23):
Correct.

Blair (00:24):
Now, is that.
Let me ask you this.
Is that affiliated with the Navy or Air force,or is that just a.

Brian (00:29):
No, it's a private, not for profit university based in San Diego.
But we have employees and faculty around theUS, and it's mainly online.
But we do have classes, offer classes in theSan Diego.

Blair (00:45):
For some reason.
I thought it was affiliated with one of the
military, but that's okay.
And Brian is a returning guest, because the
last time he was here, we discussed his book,the Declaration and Constitution for free
society.
And today we're going to discuss an earlier
book of his called markets don't fail, andwhich I wholeheartedly agree with, or even

(01:09):
more.

Martin (01:09):
Yeah, positive.
And Martin, here, Markus, are always right.
Right.

Brian (01:14):
Yeah, they succeed.
Yeah, that's true.

Blair (01:16):
That's true.
They do succeed.
Shall I go ahead and continue, Martin, or doyou want to.

Martin (01:19):
Yes, please.
Please do that.

Blair (01:21):
All right.
So, Brian, what topics do you cover in markets
don't fail?

Brian (01:25):
Sure. Yeah. Now, the book focuses on topics that are covered in most contemporary
economics, what they call principles,textbooks.
In virtually all, or at least most of thosetypes of books, there's typically at least one
chapter that addresses topics concerningmarket failure.

(01:49):
And it's from these topics that come thechapter titles of that book and the topics
that I focus on.
So, you can see the topics in the chapter
titles, but it covers monopoly, the antitrustlaws and predatory pricing, externalities, or
externality theory, the regulation of safetyand quality of products and working

(02:13):
conditions.
It also covers environmentalism, economic
inequality, so called public goods, goods, andasymmetric information.
So, those are the main chapters focusing onthe alleged failures of the market that I show
and felt.
What?
The market doesn't fail.
But then there's a chapter on the first

(02:33):
chapters on capitalism, socialism, and themixed economy, where I compare and contrast
those political and economic systems.
So there's a total of nine chapters.

Blair (02:42):
I see.
I see.
And what is your central message of the book?

Brian (02:46):
Yeah, the central message of this theme is, in one sense, contained right in the
title.
The free market does not fail, but succeeds
both morally and economically, because therights of individuals are protected to create
a free market.
And this makes possible the production of an
abundance of wealth and the flourishing ofhuman life.

(03:07):
So.

Blair (03:08):
Okay. Okay.

Brian (03:09):
Book really provides a compelling economic, moral, and even an epistemological
defense of the market by showing why thetypical market failure argument is false and
how, in fact, free markets succeed.

Blair (03:23):
What is the proper definition of capitalism?
And why do you think it's so misunderstoodtoday, especially in our universities?

Brian (03:32):
Yeah, I mean, it is misunderstood, not only misunderstood, but I'd say it's really
hated by actively university professors, anduniversity professors are to a great extent
advocates of socialism and communism and atleast generally the welfare state, especially
in the US.
I'm more familiar with that.

(03:53):
But I think that's true virtually around theworld.
And I think it's misunderstood and hatedbecause of the wide acceptance of the altruist
code of morality and collectivism within theuniversities.
And really the general abandonment of reasonin the universities and the culture.

(04:13):
I mean, the latter in terms of abandoningreason, is seen in the acceptance of
subjectivist ideas, skepticism, the beliefthat we can't be certain of anything, that
reality is basically whatever you want it tobe.
And postmodern philosophy as well, whichembraces the idea that there is no objective

(04:35):
reality and no objective means to understandthe world.
And this leads to really a growing tribalism,which we're seeing in the form of, well, in
the US.
Again, I'm more familiar with, but as so
called identity politics, which basicallytranslates to racism and nationalism and

(04:55):
sexism and various other forms ofcollectivism, where people associate with a
group that they feel like they belong to, andusually with the abandonment of reason, it's
usually a more concrete bound, perceptuallevel association like race or nationality,
where you're born or the color of your skin,with racism and so forth.

(05:19):
And I think we see evidence of all this in thelashing out against Israel and the support of
Hamas and palestinian terrorists.
That's a part of the hatred of capitalism and
the abandonment of reason and the rejection ofwestern values like individualism and
individual rights, and the embracement ofprimitive values, mysticism and tribalism.

(05:46):
And really a primitive form of collectivism.
Altruism is incompatible with capitalism.
Altruism says it's a virtue to sacrificeyourself to others.
Capitalism protects the rights of theindividual so that you can pursue your own
happiness.
Say really, egoism, rational egoism, is
consistent with that.
Your life belongs to you.

(06:07):
You have the right moral rights, and it ismoral to act in your self interest, to pursue
your own happiness.
And capitalism enables that to happen.
You don't have to live for any group like therace or the gender, like collectivism
dictates.
So I think those ideas, collectivism,
altruism, and really mystical ideas, theabandonment of reason are rampant on college

(06:31):
campuses.
And that's why the hatred of Kathy and
complete misunderstanding with regard toBrian.

Blair (06:39):
Go ahead.

Martin (06:40):
Yeah, I have some here, some thoughts about last time you were here, episode 51 and
the book you wrote then and what you havelearned from that, but also for this book now
that we are talking about and also your, youcould say second book and you mentioned there
about the anti.

Brian (07:00):
Yeah.

Martin (07:01):
What's going on in Middle east and so on.
It's interesting that I have found that it's athink tank, free market think tank and for
freedom of expression in Lebanon.
So it's interesting what could happen there if
they will see the light and it will be a freemarket.
So some thoughts about writing these books andalso what's going on right now, for example,

(07:24):
in Argentina.
Have I read your book and books?

Brian (07:29):
Well, I guess I can focus first on Argentina.
I don't think they've read my book.
I don't know if Javier Millay has read it or
not.
I know Sim Ayn Rand and he's read a lot of
Ludwig von Mises and Milton Friedman as well.

Blair (07:44):
Lift.

Brian (07:45):
And Friedman philosophically has problems, but he does have some good economic
ideas.
But what I see going on in Argentina, yeah, I
think it's a good thing.
I mean, Javier Millay, he advocates and is
implementing many free market economicpolicies, such as radically cutting government
agencies.

(08:05):
I read the Ministry of culture, he's cut, and
the state news services, he's cut and he'scutting, radically cutting government spending
as well, which the government, the argentinecentral bank, creates a lot of money, inflates
the money supply massively, and that's whyprices have been going up so radically, I

(08:26):
think somewhere in the order of maybe 300% ayear or so.
And he wants to dollarize.
He hasn't done that yet.
I don't know if he'll be able to do that.
So he wants the official currency to be the US
dollar, which I think would be extremelybeneficial economically and be much more free
market oriented.
Even though the US dollar is a fiat currency
compared to what Argentina has, it would bemuch better.

(08:48):
And he wants to eliminate the central bankthere in Argentina, which would be beneficial.
Those are the sources.
And the government's desire basically to
provide lots of subsidies are the sources ofthe massive increase in the money supply.
He's eliminated rent controls too, and manygovernment subsidies, like fuel subsidies.
So he's made some big changes, and even thoughthey've resulted in short term economic pain,

(09:13):
he has explained that in the long run thingswill get better.
So he understands how these benefits workthemselves out.
You might not get the benefits immediately.
Some benefits.
I think the rate of increase in prices isstarting to come down.
So prices are still going up fairly rapidlyfrom what I've read.
But the rate of increase has decreased, whichis a good sign.

(09:38):
Interest rates have fallen, rents haveactually fallen and the rental supply of
housing has risen.
I've read that the Argentine, and I've seen
the argentine peso has actually appreciating.
So he allowed it to devalue at first in the
market because it was overly valued, but nowit's actually appreciating.

(09:58):
And the government has achieved its firstquarterly budget surplus in 15 years.
So he's moving them in a good direction.
I mean, I don't agree with some of his more
fundamental ideas like he is an anarchocapitalist.
Anarchy in my view is incompatible withcapitalism.
But if he's not focusing on that, I mean, theyhave too much government to pare back, I

(10:22):
think.
So what he's doing I think is good in terms of
reducing the size and scope and power ofgovernment.
He opposes a woman's right to obtain anabortion, which unfortunately that fundamental
right he opposes.
But given the context of Argentina and the

(10:43):
benefit to Argentinians and also just beingable to see how these free market reforms will
benefit Argentine, if he's able to implementsignificantly more of them, that will be
beneficial for capitalism and of course forArgentina as well in the world in general.

Blair (11:04):
Agreed. Agreed.
I think just as a broad overview, I think it's
he and the people who voted for him againstwhat the entrenched bureaucracy and of course
the, the universities there.

Brian (11:16):
Right.

Blair (11:16):
So it's, it's sort of a, maybe it, hopefully it won't be a pitched battle.

Brian (11:22):
Well, but yeah, he's faced a lot of opposition, but he's able to, he's been able
to get some things done in terms of reducingspending and departments and things of that
nature.
So I can talk now about my books because,
Martin, you'd asked about what I learned frommy books and really from, from all the books.

(11:44):
So there's, markets don't fail, that's thefirst one.
And then money banking in the business cyclethat was a two volume book that's actually
divided into two standalone books and then adeclaration and constitution for a free
society.
One thing I learned early on, and I've applied
that in all the books, is really to providethe clearest case for the ideas your trying to

(12:09):
refute or address.
And so I go to the sources that most clearly
describe those ideas and I use a lot ofexamples and quotations from those sources.
Sort of let people speak.
Let the people who advocate those ideas or who

(12:30):
most clearly express those ideas speak andpresent those ideas as much as possible,
because that ultimately makes it easier for awriter and readers understand those ideas.
And it makes it easier, I think, for me as awriter, to refute them, you know, like when
you're addressing ideas concerning marketfailure.

Blair (12:51):
So, okay, that's good.
That's great.
Let me say, culturally, it seems like everyeconomic calamity is blamed on both capitalism
and or the lack of regulation.
I consider this false.
And do you also think it's false?Yes, because I think certainly the financial

(13:14):
sector is the most regulated sector on theplanet.

Brian (13:20):
Yeah. And that as an economist, that's one of the first areas of the economy my mind
goes to.
And that's what money banking in the business
cycle focused on.
The business cycle and recessions and
depressions.
And in fact, I say at the beginning of that
book that it's really an extension of marketsdon't fail because it's claimed by many

(13:43):
economists that recessions and depressions area failure of the market.
And so we need government interference in theform of a central bank or regulations of the
banking system, or so called fiscal policy,which is taxing and spending policy by the
government to manipulate what's happening andmanipulate conditions in the economy.

(14:07):
So it's claimed that markets fail when youneed this government interference.
And that was a long topic.
I would have included it in markets don't
fail, but it, you know, it required a book inand of itself to address, because it's just
really not true that the market createsrecessions and depressions.
I mean, I wouldn't say you could completelyeliminate recessions and depressions or the

(14:29):
business cycle if we had a complete freemarket in the monetary and banking system.
But we could certainly make, certainly lessenthe amplitudes of the swings in the economy
and make the business cycle on recessions anddepressions much less significant if we move
to a free market in money and banking.

Blair (14:49):
I was about to say even those, if they happened, they would be much shorter in
duration because the mechanism is there tocorrection.
It's already there.

Brian (15:00):
Right.
And people could act very quickly.
There wouldn't be sort of the perverseincentives created by government interference
where, for instance, when you bail outfinancially troubled financial institutions,
you perpetuate problems that exist in theeconomy as opposed to sort of eliminating

(15:21):
those defunct companies or companies thataren't well run and allow people basically to
get on with their lives.
From there.

Blair (15:29):
So that to me, that's like, I'm not going to call it crony capitalism.
I call it crony socialism.

Brian (15:37):
Right.
I use the term crony collectivism.
Yeah, crony capitalism is a contradiction interms.
Crony collectivism or crony socialism, that'sa redundancy.
But in today's, you know, intellectuallycorrupt environment, philosophically, you need
those redundancy, like Ayn Rand mentioned,with individual rights.
Well, rights themselves are only retained bythe individual, but you have to use individual

(16:03):
rights because of problems philosophically inour culture.

Blair (16:08):
Yes, let's take some chapter titles and go through some of those.
What do you say now?Of course, Google now is under the antitrust
boot.
What do you think of antitrust laws?

Brian (16:22):
Well, antitrust laws, I mean, they create monopolies, they don't create more
competition.
The antitrust laws, they were created, so
started out being created in the US, and othercountries and areas of the globe have created

(16:42):
them as well.
European Union now has antitrust, various
antitrust laws as well.
They were a reaction, though, in the 19th
century in the US, in part a reaction tocompanies growing, large corporations
especially.
And there was fear that this would create
monopolies, according to one view of what amonopoly is, where you have a large seller

(17:08):
that dominates an industry, and what theantitrust laws, though, end up doing is
restricting competition.
They prevent firms from entering or dominating
an industry.
And even if it's based on voluntary trade, my
view with regard to monopoly says that, well,if you achieve your dominant position, if you

(17:32):
dominate the market, but it's based onvoluntary trade and your own superior
productive ability, that's not monopoly,that's a part of competition and that's
beneficial.
And we see that the benefits of large, very
competitive companies like Walmart or Googleor Meta or whatever it might be, they have to

(17:56):
be really competitive, develop good productsor keep prices low, or some combination of
that, and we all benefit that from that.
That's a part of competition.
So the antitrust laws, though, were a reactionto that.
For instance, one of the laws, the FTC act,declared unfair methods of competition in
commerce illegal.

(18:17):
Unfair.
It's not even defined really what's unfair.
So some people might consider it unfair if a
company opens up and drives you out ofbusiness through their own superior productive
ability.
That's not unfair, though.
That's a part of competition.
That's a part of production and voluntary
trade.
And so if the antitrust laws are used to

(18:39):
restrict those kinds of companies, to restricta Google or a Walmart or a Microsoft, or an
IBM.
At one time, it was used to restrict their
competitiveness.
They're actually creating monopoly by
restricting competition, because monopoly inits essence, is a restriction of competition,
and competition is basically production andvoluntary trade.

(19:02):
And when the laws are used to restrictsuperior competitors, they're restricting that
production and voluntary trade, and that'swhat they're used largely to do, to restrict
superior competitors.
I read one time, I think I mentioned this in
markets don't fail, that about 95% ofantitrust cases are instigated, really by

(19:27):
competitors or companies that can't handle thecompetition.
Like for instance, with regard to theMicrosoft case, they were initiated by, or at
least instigated by some microsystems, whichmade it compete system, and Netscape, which
had a competing web browser at the time.

(19:48):
So now the government's usually prosecuting
them, but the instigator, the ones running tothe government for protection, are usually the
ones that can't handle the competition.
So they actually restrict competition.
They initiate physical force.
The sound view of monopoly to me is where we
understand monopoly as the governmentinitiating physical force to reserve a market

(20:09):
or a portion of a market to one or moresellers.
And that's what the antitrust laws do.

Blair (20:14):
Well, that's pretty thorough.
Thank you.
Brian.
What does your book say about the regulation
of safety, quality and working conditions?I mean, of course, under Biden, I think the
labor unions are growing, and I've never beena real fan of labor unions, but maybe at one
time, maybe at one time they had a. But Ithink I don't see it today.

Brian (20:39):
Yeah. And the problem I think always has been with labor unions is that they try to
use force to achieve their ends within themarket.
So now we have in the US what's known as theNational Labor Relations act, which restricts
the ability of employers to hire outside ofunions.

(21:03):
It can force employers to hire union workersif a majority of workers vote to unionize in a
work location.
So the law in a free market, as an employer,
if I don't want to hire union workers, andworkers are just trying to agitate for a
union, I can fire them if I want to.

(21:25):
I could choose, obviously, also to deal with a
union if I wanted to, but I could fire them.
And you can't do that today in the US due to
the National Labor Relations act.
But even before the National Labor Relations
act that was passed in the 1930s, the unionsused to use the mob to use force against

(21:47):
employers to try to get their way.
So they've always used force, and that's the
real problem I have with labor unions.
Labor unions as such, they, they could exist
in a free market.
People could try, employees could try to
unionize.
But again, like I say, employers could fire
the union workers if they want to.
So there won't be this power on the part of

(22:08):
unions to violate the rights of employers andnon union workers as well, and initiate
physical force.
And that ties into regulation because that's a
form of regulation, that National LaborRelations act, which ultimately raises costs
to businesses because that's what it does.
It gives unions artificial powers to negotiate

(22:32):
higher wages.
They can get higher wages for their members.
Ultimately, that means lower wages for nonunion workers and higher prices, though, for
people who are buying the goods that unionworkers produce.
So it means higher costs, higher and higherprices.
So a lower standard of living overall.

(22:53):
And that's what regulation in general does.
We don't need regulation to improve safety andthe quality of products.
I mean, that's what competition does.
Competition sets the standards.
And we see just all the unbelievable newproducts and the improvements of products like
the iPhone, for instance, and smartphonetechnology in general, and computer technology

(23:16):
in general.
We didn't need regulation to improve that or
create it.
And regulation generally is the government
using the initiation of physical force toachieve some end that, that politicians and
government bureaucrats want to achieve.
So it involves imposing requirements or

(23:36):
standards that people might not want toaccept.
So regulation generally raises costs and makesit harder to produce.
A prime example of that is in the US, the Foodand Drug Administration.
So it regulates pharmaceutical drugs, amongother things, and it makes it much more costly
to produce those drugs.

(23:58):
It takes much more time than it otherwise
would, I believe, like eight to ten years todevelop a drug that you can bring to the
market and far more money to develop thosedrugs.
So you end up with a lot of drugs that arejust never developed because it's just too
expensive and the companies just don't want tospend the money.
It's a very difficult business developingdrugs.
They often start, I've heard, with maybe 2000chemical elements and compounds which they

(24:24):
start testing.
And then as they go through testing those
chemicals and then perhaps testing on animalsand clinical trials and so forth, they might
whittle that down to one drug that cures somedisease or helps with regard to some disease
and of course is safe, so it's very expensive.

(24:44):
And the FDA regulating safety and
effectiveness of drugs just makes it much moreexpensive.
So I've seen estimates that the FDA kills morepeople than it saves because of its
regulation, because it makes things so costly.
It keeps many drugs off the market that could

(25:04):
be beneficial to people but never come to themarket or are delayed in coming to the market.
So a lot of people die or are harmed due tothat.
I think the COVID pandemic is a great exampleof that.
In the US, they had mapped the DNA in earlyJanuary of 2020, and we didn't have a vaccine,

(25:26):
at least in the US till November of 2020.
But they could have used that DNA knowledge
probably to have a vaccine maybe in May of2020.
And so you had about a half a year wherepeople, you couldn't generally get a hold of a
vaccine and.
But could have many people died, of course,
during that time.
And they could have been saved.

(25:47):
To me, with regard to pharmaceuticals, youshould be able to use them.
You want to do that in consultation with adoctor.
But it might be worth the risk to some peopleif they haven't been fully tested, to use some
drugs and try them out if they're in a veryhigh risk category or something for the
disease.

Blair (26:04):
Yeah.

Martin (26:04):
And Brian, where you have your latest blog post that you talked about, you had a
presentation regarding trade and immigration,and I could see that coming from, as an
American in spirit, but in Sweden, regardingthe, the swedish version of FDA and also with
different supplements and also different drugsand nootropics and other things like that.

(26:28):
So that getting complicated.
And you have that, like in North America, you
have some drugs could be legal in Canada andMexico, but it's not okay to use them in
America and vice versa.
And also the prices are very regulated, so
it's no competition between.

Brian (26:49):
Right, right.
Yeah. I mean, it seems like a lot of drugs
often are on markets outside the US before inthe US.
I don't know if that's generally true, butit's true with some drugs that I've heard of
and I think could be due to the very strictrequirements of the FDA.
And that's not a beneficial thing in my view,because it's killing people.

(27:09):
On net.
More people are killed than saved.
More people are harmed than then benefit fromthe FDA.
And so on net, it's basically killing people.
That's not beneficial at all.
And markets like Canada, I know, yeah.
They have a lot of price controls on their
drugs and medicine in general.
And so you have a lot more shortages as a

(27:30):
result of that, of those drugs.
But sometimes I've heard of people in the US
buying drugs in kindling, but I don't know howeasy that is to do, to take advantage of, of
those lower prices.
But I mean, the higher prices in the US are
also due to the government's provision ofhealthcare.
And that drives up demand and prices forhealthcare, pharmaceuticals.

Blair (27:53):
You're right.
Government interference.
And the medicine is all but wiped out.
Health care.

Brian (28:01):
Right.
Yeah, coming worse and worse, that's for sure.

Blair (28:05):
All right, here's one of Martin and my favorite topics.
What does the book say about environmentalism?

Brian (28:15):
Well, yeah, that's a big subject, too, as well.

Blair (28:17):
Yes, it is.
Yes.

Brian (28:20):
So, you know, environmentalism, people, environmentalists, they basically want to
sacrifice people to nature.
They believe nature has intrinsic value, value
in and of itself, apart from the value that itrepresents to human beings in terms of taking

(28:41):
resources from nature and using thoseresources to produce products.
Like using oil to produce gasoline.
No, they want to preserve nature, preserve raw
nature, basically, the animals, the plants,the rocks and the dirt.
That's what they want to preserve.
That implementing that would be in a

(29:02):
consistent fashion, but it would be completelydisastrous.
I think it would lead to.
If we had consistently environmentalist based
government, it would lead to misery, povertyand mass murder on a scale that would make
socialists and communists look like friends ofhumanity.
But along the way here, we have a lot ofregulations in our mixed economy here and

(29:24):
mixed economies around the world, a lot ofregulations that make it harder to produce.
You get lots of lawsuits based on laws thatexist.
We have the Environmental Protection Agency atthe federal level in the US and based on laws
that, of course, the Congress has passed, butenforced by the EPA, and lawsuits that

(29:46):
environmental activists will engage in.
It becomes much more costly to produce goods
to, for instance, build housing in certainareas because you'll face a myriad of lawsuits
from environmental groups that try to restrictthat.
So in California, where I am, you have aCalifornia coastal commission which regulates

(30:10):
building on the coastline.
And it's just much more difficult to build on
the coastline and much more expensive.
But even if you go inland from the coast, it's
much more difficult to build, especially whenyou get into less populated area, because
they'll declare it'd be declared conservationareas.
And so if it's any kind of an area that, wherethere hasn't been a lot of building, that

(30:30):
environmentalists will often sue to make itharder to build in those areas.
And, of course, the production of oil,drilling for oil is very difficult as a result
of environmental regulations and lawsuits.
So it harms our ability to predict, it lowers
our standard of living as a result.

(30:53):
This is all driven by that belief that nature
has intrinsic value and the human being shouldbe sacrificed to nature, but it's just not
true.
Nature has no intrinsic value.
Nature derives its value from our ability toacquire resources from nature and produce
goods that benefit our lives.
And this morality of sacrifice I mentioned,

(31:14):
it's a destructive code of morality.
And I discussed that in detail in markets
don't fail.
If you act on altruism, the belief that self
sacrifice is a virtue, if you act on itconsistently, your own death would be the
result.
And to the degree that you act on it, though,
it's going to undermine your ability to live,because it's about sacrificing to others.
And if everybody acted on that consistently,we'd all basically destroy our own ability to

(31:41):
survive and flourish.
So it's far worse, I think, than even
socialism.
Because at least with socialism, there's a
superficial appearance that people are atleast sacrificing to other people.
So it's a superficial appearance of helping,benefiting other people.
But with environmentalism, human beings havetaken it, been taken out of the picture

(32:01):
altogether and sacrificing to nature.
So that's particularly harmful and
destructive.

Blair (32:08):
Yet it's egoism that is portrayed as walking past, drowning children with your
nose.

Brian (32:13):
In the air.

Blair (32:16):
Instead of altruism, frankly, you can't live consistently altruistic.
You have to.

Brian (32:23):
Yes.

Blair (32:24):
Anyway, let's go back to your book.
What did you mean by, quote, the politics and
economics of externalities?I'm not even familiar with that term, frankly.

Brian (32:35):
Externalities, externalities.
Yeah. That's a chapter in the book, and it's a
prominent theory in economics.
So, yeah, before I can really talk about the
politics and economics of externalities, itmight help to understand what an externality
is.

Blair (32:51):
Sure, please.
Yeah.

Brian (32:53):
The basic idea, though, of the politics and economics is though, looking at the
economic implications of externalities, andthen how laws based on externality theory
would be implemented through the government.
But an externality, there are two types of
externalities.
There's what are known as positive and
negative externalities.
A positive externality is a benefit you

(33:15):
receive from others that you don't pay for.
So an example would be immunization creates an
external effect.
If a lot of people around you are immunized
from some infectious disease, even if youdon't receive the immunization, you're gonna
benefit from that, because since everybodyelse will be less likely to get the disease,

(33:37):
that means you'll be less likely to get thedisease.
So it's that positive effect from the actionsof others.
And the claim is that because ofexternalities, you get too few of these kinds
of goods provided, like immunization.
Also, you could think of like a lighthouse as
considered to have positive externalities.
Even if you don't pay for it, you can still

(33:58):
use it.
If you own a ship or a well manicured lawn and
garden, you can walk by it and enjoy thebeauty without having to pay for it.
So too few of these are claimed to beprovided.
So the claim is that you need the governmentto subsidize the provision of these goods or
provide them itself.
So that's positive externalities.
Negative externalities are a cost imposed onyou by others that you're not compensated for.

(34:23):
So pollution, say, from the use of theinternal combustion engine or steel mills, or
whatever it might be, that's said to create anegative externality of cost on you.
And it's claimed too many of these types ofgoods are provided because the cost, the
external cost, is said not to be accountedfor.
So the claim is by economists that you need atax, the government, tax the activity, or just

(34:48):
restrict its production.
The claim is.
And so you have these two types ofexternalities.
The fact is, though, with regard to theeconomic implications, if we had to compensate
everybody who created a positive externalityand make everyone who creates a negative
externality pay, it would lead to economicstagnation.

(35:09):
We would all, for instance, have to becompensating those who come up with new
products that are not patentable, or that youcan't copyright, such as, say, the idea of
buying goods on layaway or frequent flyermiles, or the first one to come up with the
idea of a drive through at a fast foodrestaurant.
You can't patent or copyright these types ofproducts, but it's created a positive external

(35:35):
effect.
They do, in the sense that others can use
those ideas, and they weren't the first one tothink of them.
So they receive a benefit for which they don'tcompensate the original creator of it.
And it would just lead to a proliferation ofcross payments, really, between people.
And another example of a negative externalityis the idea of the original Henry Ford, for

(35:58):
instance.
He would, according to the externality theory,
have to compensate buggy producers and horsebreeders, because he drove a lot of them out
of business.
People voluntarily purchased his product
instead.
And he made automobiles affordable for most of
the population.
So people were giving up their uses of horses
and buggies, and a lot of them were driven outof business.

(36:21):
So that's allegedly a negative externality.
And again, it would just lead to stagnation,
lead to economic regression, in fact, wherewe'd go backwards in terms of our standard of
living for all these payments.
That would have to be made.
The only ones that might flourish are lawyersand accountants for keeping track of who owes

(36:44):
what and suing people to exact payment.
But really, with regard to externalities, the
thing that needs to be focused on orunderstood is that only things that violate
only negative externalities, that violateindividual rights are the ones that people
should be compensated for.
And you need well defined and protected

(37:07):
property rights for that, and a legal systemto implement that.
So, for instance, say a case of a rancher'scow, a strain onto a farmer's land and eating
some of the farmer's crop.
Well, you know, if you have a proper legal
system that protects rights, the farmer cansue the rancher in a court to get an
injunction imposed on the rancher.

(37:28):
Or there might be voluntary agreements that
arise.
Maybe the rancher pays the farmer or something
like that.

Blair (37:32):
Yes, exactly.
I was about to say they could probably sell it
between themselves.
If it's just like one small incident.

Brian (37:38):
Yeah, if it's a small incident, larger incidents might be a little bit more
difficult.
But the focus, yeah, the focus should be on
protecting rights, not worrying about everysingle external effect we have on others,
because there's been a proliferation.
And environmentalists use this quite to
justify government interference, the creationof CO2, allegedly causing global warming and

(38:03):
the alleged destruction that's supposed tocome from that.
They claim that's an external effect andexternality of capitalism, or noise pollution
or pollution in general, they talk about.
But generally status, it's a very, the concept
of externality is very status.
Collectivist education is said to create a
positive externality.
So the government should provide that because

(38:25):
it benefits people who don't get educated.
If you go to get educated and you gain
knowledge and are more productive as a result,you're going to benefit others.
And so the claim is, well, the governmentshould provide it then, or subsidize it.
So there's a lot of forms of governmentinterference that are rationalized based on
externality theory, but they're, and justquickly on the positive side there with

(38:48):
positive external effects.
Individuals should pay others only for
benefits that they voluntarily contract toreceive from others.
If the government has to force people throughsubsidies to increase the supply, that
violates rights.
And it's not beneficial either.
To the extent that, you know, if people arenot willing to pay voluntarily for these

(39:11):
goods, then they shouldn't be provided andthey're not underprovided.
And forcing people to pay for what they don'twant, that violates individual rights and
decreases satisfaction and well being in theeconomy.
And there's a lot more I could say in thebook, I talk about how the concept externality
is invalid because it lumps together thesethings, violating rights and protecting

(39:32):
rights.
But the only consideration in this context
that should exist is whether or not individualrights have been violated.
And the government should only act when rightshave been violated.
We shouldn't be looking at just whetherthere's an external effect.
If that were the case, we'd also have to.

(39:52):
I use an example and.
Well, what about the external effects ofplastic surgery?
So should men be forced to subsidize plasticsurgeons to do more breast enlargement
operations?Positive effect from that.
You know, it's just, it would be crazy, theabsurdity, because it's an in.

Blair (40:19):
All right, well, I think in one of your last chapters or one of your closing chapters,
and here's another term I'm not familiar with,what is asymmetric information and what does
that mean?

Brian (40:30):
Yeah, asymmetric information.
So that's, that's a topic that focuses on how
people having different information can changetheir behavior.
And it's really something that exists in thedivision of labor, by the nature of a division

(40:52):
of labor.
And economists will claim that we should get
rid of asymmetric information, or at leastlimit asymmetric information.
And implicitly, that's really an argumentagainst having the division of waiver would be
disastrous.
But asymmetric information, it exists when
either the buyer or the seller in a marketexchange has some information that the other

(41:17):
person in the transaction does not have.
And it leads allegedly to a couple of
problems, which, you know, it's claimed tolead to these problems, but it doesn't in most
contexts, or some things can be done tomitigate the situation.
So it leads to what's called adverseselection.
When, when the parties on one side of themarket who have information not known to

(41:40):
others, they do what is called self select ina way that adversely affects the parties on
the other side.
And so there was an article called the market
for lemons written by an economist, GeorgeAkerlof.
And he actually won a Nobel prize for his workin this area.
And it just, it's not a sound argument at all.
And unfortunately, it shows the problems, the

(42:03):
economic profession.
I think he should have been laughed out of the
economics profession, but instead he was givena Nobel prize.
But he says that the markets for used carswould break down because of this self
selection and this asymmetric information.
The idea is that, well, as a buyer of a used
car, you don't know about the quality of thecars in the market.
So you're not going to offer as much moneybecause of that uncertainty.

(42:26):
But what happens is the claim is that thatleads to sellers of the best cars to withdraw
their cars because they're not going to getthe money they think is necessary to
compensate them.
But that leaves more lemons or low quality
cars in the market.
And so that means that the buyers would offer
even less, which again, leads to the sellersof the better cars to withdraw theirs from the

(42:51):
market.
You see where this is going.
You'll have nothing but so called lemons orlow quality cars on the market.
And the market would allegedly break down.
And of course we don't.

Martin (43:01):
Or you make a lemonade stand off ultra.

Brian (43:04):
Yeah, yeah, you can make that.
That's what would happen in the market.
Yeah, but that's not what this argument says.
And, you know, we don't see used car markets
break down.
So, you know, this is a theory that just, it
doesn't agree with the facts and it's notbased on the facts of reality at all.
There are all kinds of ways and methods youcan use to determine the quality of the car.

(43:24):
You're trying to buy a used car in terms of,you know, there's, well, you can drive it, you
can even take it to a mechanic and have theminspect it.
Or, you know, you might just look at the brandname.
If it's a high quality type of automobile,then, you know, they tend to be higher
quality.
You might look at the service records.
You know, that's, people often keep theservice records for their vehicles just in

(43:47):
case they want to sell it as a used car.
And you can say, yeah, yeah, I've been doing
regular maintenance and so forth.
It's an argument that some economists make,
but it's not a good argument at all.
It also has said this asymmetric information
is said to lead to what's called the moremoral hazard problem, where one party to a
transaction changes his behavior in a waythat's hidden from or costly to the other

(44:08):
party.
So an example would be like, if you get health
insurance, the claim is, okay.
Now I'm not going to take care of myself as
much because I don't have to pay for my healthcare.
And again, or if you get insurance to protectyour home from fire damage, oh, so I'm not
going to be as careful about whether with theuse of fire or my electrical system in my home

(44:30):
because I have insurance.
And the thing that people would act like this,
it just makes no sense at all.
I mean, whether you have insurance or not,
nobody wants to go to the doctor.
Nobody wants to get sick, nobody wants to have
a broken leg.
So you're still going to be careful.
And, of course, insurance companies have waysto get you to be more careful, though.
They will charge deductibles so that you haveto pay for the first amount, maybe the first

(44:56):
$1,000 in expenses or $500 in expenses, orthey'll have copayments or make you pay a
percentage, or they won't charge you at allfor preventative care quite often.
So that gives you a little incentive to do thethings to prevent you from needing more
extensive health care services.
But it's just absurd to think that people

(45:18):
would act.
Businesses have strong incentives to get you
to.
To figure out what you want as a buyer and to
get you to ways that they'd like you to act.
So. And information, you know, because this
asymmetric information does exist.
Producers have specialized knowledge in the
division of labor that consumers don't have.

(45:39):
They use all kinds of means to try to show you
that they're doing a good job throughwarranties and guarantees and brand name
recognition.
So you build a good product and a good
reputation.
And, you know, I know when I buy, say, a
Toyota automobile, going to last for a longtime, because they've lasted a long time for
many decades.

(46:00):
So there are all kinds of ways to provide
information, and it's in your incentive, ifyou want to make more money, to provide the
information that consumers want, because thatwill help get them to buy more of your
products.
So we wouldn't want to eliminate the
asymmetric information.
And the profit motive provides a strong
incentive for people to provide or obtaininformation because we won't want to eliminate

(46:25):
it because it would mean getting rid of thedivision of labor, which would be horrible for
our standard of labor.

Blair (46:31):
Brian, great.
I do have one final question about your book,
and then I'd like to ask you your view or youropinion on some famous or infamous economists.

Brian (46:43):
Sure.

Blair (46:43):
All right.
What do you hope the reader will gain from
reading your book?

Brian (46:50):
Yeah, from reading my book.

Blair (46:52):
Yeah. Marcus, don't fail.
Yes.

Brian (46:53):
Or any of your books reading.
Marcus, don't fail.
Well, focus on Marcus.
Don't fail.
Yes.
Yeah.
I think the main thing would be gaining abetter understanding of economics because
these are fallacies that exist in terms ofclaims that markets fail because the markets

(47:16):
allegedly won't create better products andworking conditions or will lead to monopolies.
So these are all fallacies that are out thereand in the mainstream, because these are a
part of, like I say, at least one chapter inevery contemporary economics book will have a
discussion on these topics.
And so understanding the benefits of the free

(47:39):
market and understanding that not only is thefree market beneficial from an economic
standpoint, that it leads to a greater abilityto produce wealth and a higher standard of
living, but that it's morally right that itprotects, or the rights of the individuals
need to be protected to establish a freemarket.

(48:01):
And that's a fundamental requirement of humanlife.
And there's an integration between, andeconomics and morality and political
philosophy here.
What is beneficial morally in terms of egoism
and acting in your rational self interest?When laws are implemented to protect
individual rights, which is what is needed,that leads to beneficial economic results.

(48:25):
It protects the freedom to produce and furtheryour life and well being.
And the opposite is true as well.
There's an integration here between altruism,
collectivism, or government interference, andthe economic disaster that results from that,
a much lower standard of living.
So if you believe self sacrifice is a virtue

(48:47):
and you implement laws based on that, thatsacrifice the individual, the end result would
be a socialist society, and that sacrificespeople on a massive scale.
It leads to misery, poverty and death on amassive scale, and mass murder.
So it's no accident that you get those effectsif you understand the fundamental moral issues

(49:10):
at hand.

Blair (49:11):
Very good, sir.
Very good.
All right, let's talk about some economiststhat have.
What do you think?Or who was John Maynard Keynes?
And why are his economic ideas?Why do they seem sacrosanct or be beyond
question today?

Brian (49:30):
Right.
Yeah, he was a very influential 20th century
economist, died in the mid 20th century.
And his ideas were popular.
They rose in popularity quite a bit during andafter the Great Depression, and they're still
extremely popular today.
So with regard to the Great Depression, it's

(49:52):
believed by many economists that his policieshelped pull countries out of the Great
Depression.
And some even believed he saved countries from
becoming much more socialist in the wake ofthe Great Depression.
But really, I think people like him because onthe surface, and many people do because he's,

(50:12):
and many economists, because on the surface atleast, he's not an advocate of outright
socialism, but greater government interferencein the economy.
So he calls for greater government spending inthe economy.
He believed that, that recessions anddepressions were an inherent feature of
capitalism, and he thought that you neededmore government spending to maybe not

(50:35):
eliminate, but at least lessen the effects ofthe business cycle and recessions and
depression.
So he wanted more spending and government
spending and more government controls in theeconomy to mitigate the effects of the
business cycle.
I mean, I think during the time of the Great

(50:56):
Depression, so that was in the 1930s, I thinkmany economists were not happy or
uncomfortable with the prevailing economicviews before keynes, which tended to be more
of the classical economics, which were morefree market oriented.

(51:17):
So classical economists like Adam Smith orFrederick Bastiat or Jean Baptiste say tended
to be more of an advocate of the free market,and they were uncomfortable with that.
I think the growing tide of collectivism andMarxism was convincing people that they didn't
like at least the free market.

(51:38):
So they were uncomfortable with that, but they
didn't like outright marxist socialism.
And so keynes opened up the so called middle
of the road, the mixed economy.
He wanted more government interference, not
complete socialism.
But if you read his most famous work, the
general Theory of employment, interest andmoney, if you read the last chapter of that

(52:01):
book, he advocates pretty strongly for maybenot complete socialism, but leans fairly close
to socialism.
I would say he advocated for what he calls the
euthanasia of the rent year, basically gettingrid of financiers.
He wanted a comprehensive socialization ofinvestment, which basically means the

(52:23):
government taking over investment.
He didn't like stock markets, although he
didn't make actually a lot of money in thestock market.
He thought they fostered too much short terminvestment.
He liked long term investment.
So he wanted more government intervention to
lessen the effects of stock markets, which, ofcourse, would be disastrous.
I mean, short term investment is extremelyimportant to keep markets liquid, and that's

(52:45):
important to give an incentive for more.
For more capital to come into those markets
and for businesses to be able to raisecapital.
So that would be detrimental to our standardof living.
So that mixed economy, I would say, leaningtowards socialism.
I think that's what people like.
And it wasn't outright socialism.
That's what they liked during the GreatDepression and that time period going up to

(53:09):
world War two.
And I think they still like it today.
Many economists, I think the majority ofeconomists, Keynesians and those who don't
claim to be keynesian, they embrace manykeynesian ideas because, for instance, fiscal
policy, using taxes and government spending tomanipulate what's happening in the economy,
that's basically a keynesian type of policy.
And most economists, even those who might

(53:31):
consider themselves advocates of significantaspects of the free market, will embrace
fiscal policy.

Blair (53:41):
So let's go to the austrian school.
What do you think of Karl Menger and Ludwig
von Mises?I mean, obviously unknown.
All but unknown today.

Brian (53:51):
Yeah. Yeah. Outside of the small circles.
Yeah.
Great economist Carl Menger, the founder of
the austrian school, was one of the threeeconomists that independently identified the
law of diminishing original utility.
I would more appropriately call it the law.
The law diminishing marginal value, whichfocuses on how prices are determined in the

(54:14):
market.
He discovered that independently.
The other economists were Leon Valras, I thinkit was a french economist, and William Stanley
Jevons was an english economist.
They all independently discovered it around
the late 1860s, 1870s and initiated what'sknown as the marginal revolution.
But that certainly was an important discovery.

(54:35):
But, yeah.
His founder of the austrian school, he was anadvocate of more limited government.
And he was an aristotelian as well.
If you read his book, Principles of Economics,
the first chapter, the first sentence of thefirst chapter says something like, all things
are subject to the law of cause and effect.

(54:55):
I remember reading that book for the first
time.
That's the first sentence in the first
chapter.
And they're like, wow, this is going to be a
good book.

Blair (55:04):
All right.

Brian (55:05):
Yeah.

Martin (55:05):
I listened to a cassette course on western economics with Karl Menger as one of
them.

Brian (55:12):
So. Yeah, yeah, yeah.
He was the founder of the school.
And Ludwig vamises is the.
Well, I would say in terms of developing the
economic ideas, he was best there.
He's probably not the most famous austrian
economist.
Friedrich von Hayek would be the most.
He won the Nobel Prize.
He wasn't as consistent of an advocate of the

(55:34):
free market, of capitalism.
Friedrich Hayek wasn't.
But Ludwig Vamises was a very consistentadvocate of the free market and developed
through.
He's got an enormous amount of writings,
through his writings developed a lot ofimportant economic truths and certainly
deserved a Nobel prize in economics.
Even more so, I'd say, than Hayek.

Blair (55:56):
Okay. And you mentioned basiat and Jean peptide.
I'm starting to read more of say's work.
Again, all but unknown.

Brian (56:08):
Right? Yeah. And unfortunately, a lot of it has to do
with economists just ignoring the oldereconomist, classical economists like say or
bastiat with Amesa's.
They reject him mainly because he's an
advocate of the free market, I think.
And austrian economics is, you know,
considered a very small minority withineconomics, the economics profession.

(56:32):
But say, yeah, a great economist as well,consistently advocated for the free market,
but he created say's law, which is a veryimportant economic truth.
The idea that supply constitutes its owndemand.
And basically what that says is that itdoesn't say whatever.

(56:52):
It does not say whatever you bring to themarket, whatever the supply of goods you bring
to the market people will buy it.
It doesn't focus on the individual level.
So if you try to sell a bikini in Alaska inthe middle of winter, that's not going to
create demand for your product.
But what it does say is that in order to have

(57:13):
more real aggregate demand, so demand at thelevel of the economy as a whole, you need more
supply.
That's the important truth that he identified.
And so, yeah, certainly a very, very goodeconomist and Frederick Bastiat as well.

(57:34):
So both, he's a french classical economist.
He was an advocate of the free market and
wrote economic sophisms.
Was an important essay showing the benefits of
free trade and the fallacies of the peopleembraced during his time when they tried to
argue against free trade.

(57:55):
And so he's known for that.
But he's also known for an essay that he wroteon what he called the seen and the unseen and
known also, he referred to it as the brokenwindow fallacy, the idea that destruction can
stimulate an economy.
He said, well, you have to look at what is

(58:16):
seen and unseen.
So if somebody breaks a store owner's window,
people see the glassmaker coming, replacingthe window and so forth.
And they say, see, it stimulated the economybecause there's more work for the glassmaker.
But what they don't see is they don't seeperhaps the tailor, the suit maker, who has

(58:39):
less work.
So he's twiddling his fingers in his shop,
because now the store owner who had his windowbroken, he was going to buy a new suit, but
now he had to pay for this broken window, andhe doesn't have the money any longer to
purchase the new suit.
So there's no, you know, destruction, he said.
And I can't remember, I can't quote him, butdestruction, he said, doesn't create

(59:02):
prosperity.
It doesn't stimulate the economy.
You may create more business for one group orone person, like the glassmaker in the
economy, but you reduce business and demandfor other products, like with regard to
detailer or the soup maker.
And that's an important truth to identify.
It's an important method of thinking because Iwould say many economic fallacies are embraced

(59:26):
by people who don't understand this brokenwindow fallacy.
And that's why with virtually every economicsclass I teach, I start out with talking about
that broken window fallacy.
I use Henry Hazlitt's presentation in this
book, Economics in one lesson.
But he got it from Bastiat.

Blair (59:45):
I see.
I forgot to mention Hazlitt in my notes to
you.

Brian (59:49):
Yeah, he's a great.
There are a lot of economists.
Yeah, we could talk about.

Blair (59:54):
Yeah, he has wrote a refuted Keynes.
I forget the name of that book, but.

Brian (59:59):
Yeah, I can't remember the name of that book.
I did read that extensively.
He has almost a line by line refugee, right?
Yes, very comprehensive.

Blair (01:00:10):
Finally, I want to ask you about someone you may know personally, George
Riesman.

Brian (01:00:14):
Yes, I do know him personally and I have him to thank for gaining an interest and
I can, and becoming an economist.
And he is a great economist and certainly
deserves a Nobel prize in economics.
Although unfortunately I know he will never
win one.
But yeah, certainly he has identified and

(01:00:35):
developed many important economic truths inhis book capitalism, a treatise on economics.
And he's got some other writings to essays andsome other short books though that he's helped
me just in an unbelievable fashion, understandeconomics, but just some of the truths that he
has identified.

(01:00:56):
For instance, his identification of what he
calls the primacy of prophets doctrine, andhis critique that he provided of what's known
as the primacy of wages doctrine.
So this is an idea that Adam Smith first wrote
about.
The claim is that wages are the original and
primary form of income in a primitive society,what would be called a pre capitalist society.

(01:01:20):
And Marx latched onto that and used that, inpart at least, to claim that's an
identification of how capitalists exploitworkers.
Because wages were the primary and originalform of income, and profits are taken from
wages.
And so that's one way that capitalists
allegedly exploit workers.
And Reisman identified that.

(01:01:41):
No, it's not true.
Weight or profits are the primary and original
form of income.
Because before capitalism, before there's any
capital, there's no costs in the economy.
There's just people appropriating things from
nature and selling them.
And what they receive is all revenue.
And because there's no cost, the revenueequals the profits.

(01:02:02):
So all the income they receive is profits.
And so it's not the case that wages are the
primary and original form of income.
And.
And profits are not deducted from wages.
In fact, it's the other way around when a
business owner or somebody starts to become acapitalist and they start to hire workers.
Now wages are deducted from what was allprofits originally.

(01:02:25):
And so to me that's just from an economicstandpoint, that's an extremely important
identification.
His net consumption, net investment theory of
profits, which shows that the profits at theaggregate level come from the consumption of
capitalists.
Because that's the only spending that really,

(01:02:45):
or one of the few forms of spending thatdoesn't show up as a cost to businesses.
And so he's not saying that, well, we needmore consumption to have a higher standard of
living.
He's just identifying the accounting at the
aggregate level, the level of the economy as awhole, of where profits come from.
And that's just it enables one to have a muchbetter understanding at the aggregate level of

(01:03:11):
what's happening in the economy, obviously, atthe individual level.
He even discusses this in detail in relationto this net consumption, net investment theory
of profits.
That it's producing good products, working
hard, building a good business.
That's what generates profits for the
individual business.
But in terms of the accounting at the level of
the economy as a whole, it's consumption onthe part of capitalists through, say,

(01:03:35):
dividends or withdrawals from their business.
And that ties into his.
I'll just discuss one that there's so many Icould discuss.
But one last important identification.
His aristotelian system of aggregate economic
accounting, which he calls the gross nationalrevenue view of accounting, which is compared
to what he calls the heraclesian view ofaggregate economic accounting, which is what's

(01:04:00):
widely accepted today.
The gross domestic product view of economic
accounting.
He shows the problems with the gross domestic
view of economic accounting.
And puts forward his own gross national
revenue, or what could be called grossdomestic revenue view of keeping track of
spending in the economy.

(01:04:20):
And it relates to his theory of profits.
He's had many, many ideas that were originalwith him, or some were original with others.
But he developed them in a much morecomprehensive and cogent fashion that, yeah, I
owe him for my career in economics.

(01:04:40):
Really.

Blair (01:04:41):
William, thats wonderful.
Thats wonderful, Brian.
My final question is hopefully a very simpleone.
Is the stock market a casino?

Brian (01:04:54):
It most definitely is not a casino.
It's not about gambling.
It's not about.
I mean, there is certain risk involved,
obviously, but gambling or a casino is justabout transferring money.
Usually transferring money to the house.
Because the odds are in the house.
They need to make money as a business.

(01:05:14):
They need to be, you know, earn money for
their owners or shareholders.
But the gambling part itself is just
transferring money in that sense.
With a casino, the money you lose is kind of
like paying for the pleasure of the experienceof gambling and the possibility of maybe
winning.
But the stock market, it's about raising

(01:05:36):
capital.
So equity capital specifically, which is
extremely important for businesses.
Without stock markets, it would be much harder
to raise capital.
So it's about producing wealth ultimately.
And it makes it possible for businesses togain access to capital in a far less expensive
fashion.

(01:05:57):
Far easier fashion, and that increases the
ability to produce wealth.
So businesses can make ipos initial public
offerings in the market, and that's how theyraise the capital from shareholders.
Then they can use that capital to produce.
And then, of course, most of the trading takes
place in what is known as the secondary marketin the stock market.

(01:06:20):
So it's not the businesses issuing ipos, butit's people who already own the stock buying
and selling the stock from each other orselling it to each other.
And that, of course, is extremely important tocreate liquidity in the market.
And it makes it possible for more funds to beinvested in the market, because you need that

(01:06:41):
liquidity.
If you're, say, a retiree and there was no
stock market, but you own shares in somecompany, well, it might be difficult to sell
those shares now with a very liquid stockmarket.
If you're a retiree, you might need money tospend.
You can easily sell those shares and then liveoff that money.
So a very liquid and that short term investingthat McCain's hated is extremely important to

(01:07:05):
creating that liquidity, and it brings farmore capital to the market than otherwise
would exist.
And it just dramatically increases the
productive capability.
It dramatically increases the capital
intensity of our economy, which is extremelyimportant for production and our standard of
living.

Martin (01:07:25):
And as an endnote there, here we are, traders in matter and spirit.
And if you get some insight for thisconversation and great knowledge of Brian
Simpson here, and also if you think maybe thiswatch and listen to this 1 hour plus minutes

(01:07:45):
of conversation, if maybe that's worth similarto go have a night out at the casino, you
know, that you could support us in going tothe support page here on captivate hosting,
and you could send donation.
And also from last time you were here some
years ago, Brian, I think, looked at thestats, and it was like 185 downloads or

(01:08:10):
individuals that could have been listened tothat podcast and earned value from that.
And then we talked about Fountain app, and wegave away, thanks to a fountain app, 50,000
satoshis.
And thanks, Brian, that you have signed up for
account on Truefans FM.
So we could give you a split tier when we

(01:08:31):
published the episode.
So when people streaming Satoshis, listening
to the podcast, or sending a digital telegramwith a booster and a note, you could get the
split of it, and then we could continue withthis work with this podcast and create more
supply of, you know, episodes from theFoxhole, the secular Foxhole.

(01:08:53):
So thanks again, Brian.

Brian (01:08:56):
Thank you.

Blair (01:08:57):
All right, ladies and gentlemen, we've been having a great discussion with Brian
Simpson.
Author of Markets Don't Fail and economics
professor at national university.
Brian, thanks for manning the foxhole with us.

Brian (01:09:12):
Thank you.
It's a pleasure.

Martin (01:09:13):
Thank you very much.

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}A Conversation with Brian P. Simpson on Why Markets Don't Fail